The Egyptian Competition Authority Takes Action Against Bid Rigging

The Egyptian Competition Authority (ECA) has recently turned its attention to the public sector, more specifically, bid rigging.

The Egyptian Competition Authority (ECA) has recently turned its attention to the public sector, more specifically, bid rigging.

A particular focus of the ECA's investigations has been the energy sector. In recent investigations, the ECA found that companies engaged in anticompetitive behavior in two sub-sectors of the energy industry. These two sub-sectors include the markets for transmission towers and galvanized iron pipes. 

According to the ECA, ten companies in the transmission towers market had violated the Egyptian Competition Law by unlawfully exchanging information and colluding in public tenders. Additionally, the ECA determined that five companies in the galvanized iron pipes market had unlawfully conspired in several public tenders.

The negative impact of these practices is significant. The ECA found that they had changed the goal of electricity by negatively impacting the quality and pricing of offers received by electricity suppliers through their tenders. Energy suppliers also experienced financial burdens that made them charge higher rates to public utilities. As a result, the ECA concluded that the violations unduly increased consumer energy prices.

What The ECA is Doing to Take Action

To address this issue, the ECA has taken a number of steps. First, it established a specialized department to review tenders and investigate anticompetitive behaviors in relation to tenders. This department will also develop campaigns to raise awareness of the Egyptian competition regime concerning public procurement. These campaigns are expected to include public outreach and information and training public sector employees on antitrust matters.

In addition to these steps, the ECA has issued guidelines for public sector employees addressing anti-competitive practices. These guidelines were issued in cooperation with the General Authority for Governmental Services. They provide practical guidance to public sector employees on identifying and reporting anti-competitive practices.

What Happens if These Guidelines Are Violated? 

Despite these efforts, the ECA has yet to announce what sanctions will be imposed on the violating companies discovered in its recent investigation into the energy sector. However, based on the ECA's current enforcement practices, fines will likely be the primary form of punishment. According to the Egyptian Competition Law, cartel violations may be fined between two to 12 percent of the revenue incurred with the products or services relevant to the violation, or fines ranging between EGP 500,000 and EGP 500 million (approx. USD 17,000 to USD 17 million).

The ECA has a reputation for being strict on companies that try to avoid guidelines and has issued big fines in the past. In recent cartel cases, such as the eggs cartel case reported in August 2022, the Egyptian authorities have been comparatively aggressive in their enforcement practices. Considering the position ECA officers took in discussions and press statements, this trend appears to continue.

The ECA’s overall strategy is to confront harmful practices in public procurement. By establishing a specialized department to review tenders and investigate anti-competitive behaviors, the ECA is taking concrete steps to prevent future violations of the Egyptian Competition Law. The ECA's efforts to raise awareness of the competition regime and issue guidelines to public sector employees are also important steps in this direction. While it remains to be seen what sanctions will be imposed on the violating companies, the ECA's track record suggests that it will not hesitate to impose significant fines.

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